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Affluence Rises for Asian-Americans

Group Now Accounts for 5%
Of U.S. Wealthy Investors;
A New Market for Advisers

By

Robert FrankStaff Reporter of THE WALL STREET JOURNAL

Updated Feb. 25, 2004 12:01 a.m. ET

The number of wealthy Asian-Americans increased more than fivefold in the past two years, making them the fastest-growing group of affluent investors, according to a new study.

The finding, to be released Wednesday in a study by Spectrem Group of Chicago, highlights the rising fortunes of Asian-Americans and points to an important new market for private banks, wealth-advisory firms and brokerage houses.
Merrill Lynch
& Co.,
Citigroup Inc.,J.P. Morgan Chase
& Co. and others have started reaching out to Asian-American clients, among others, for new sources of growth.

Spectrem's study found that Asian-Americans now account for 5% of affluent U.S. households, up from less than 1% in 2002. Spectrem defines "affluent" as households with more than $500,000 in investible assets. Affluent households represent about 9.6% of the U.S. population, according to the study. The study surveyed U.S. households that described themselves as being "of Asian or Pacific Islands descent."

The average net worth of affluent Asian-Americans was $2.9 million, with $1.5 million of investible assets. Most of the subjects in the study built their wealth as accountants, physicians, dentists or technical specialists. The study said 5% of the affluent Asian-Americans were business owners, compared with 17% of the broader affluent population. Spectrem said most of the respondents earned their wealth recently, with very few acquiring their money through inheritance.

The study found major differences in the way wealthy Asian-Americans invest compared with the broader affluent population. Affluent Asian-Americans take greater risks with their investments, the study said, and are twice as likely as other affluent investors to trade online.

They also suffered more from the stock-market downturn than other wealthy investors. Of respondents, 28% lost more than half of their portfolios during the bear market, compared with 17% of the general affluent population. Wealthy Asian-Americans remain bullish, however, with 37% looking for buying opportunities in the past year, compared with 15% of the general affluent population.

"This group tends to be very aggressive in their investment philosophy," says Catherine McBreen, a managing director at Spectrem, which studies the wealthy.

Asian-Americans have so far shied away from using wealth advisers. Of respondents, 37% don't use any advisers, compared with 29% of the general affluent population.

Still, private banks and wealth advisers see wealthy Asian-Americans as a lucrative new market. Private-bank executives and wealth advisers say wealthy Asian-Americans are beginning to use advisers more often, following their losses in bear market.